3 Driving Forces Behind E-Commerce Trends
In the 90s, when tech giants like Amazon and PayPal were first making their names known, e-commerce was driven solely by transactions and convenience. The primary focus of successful sites like eBay was to get visitors to click “add to cart.” Amazon initially harnessed this strategy as well, before it began to venture toward personalization by building relationships and securing repeat customers, eventually leading the brand to promote its subscriptions — a feature that is increasingly popular today.
Since then, the face of e-commerce has changed rapidly. Mobile-friendly purchasing arrived in the 2000s given a massive boost by apps like iTunes, one of the first major digital services of its kind. As customers turned to social media, e-commerce businesses began to focus heavily on social media engagement, marked by Twitter’s 2015 launch of “Buy Now” buttons. And in the past few years, customers’ preference for personalization has led to booming sales of subscription services through digitally native brands (making retailers more than a bit nervous).
In essence, we’ve seen the e-commerce industry move from a focus on having customers purchase physical things in a one-time transaction to creating loyal followers, building relationships, and facilitating repeat purchases.
The future of e-commerce [is now]
Today, the e-commerce industry faces changing forces on both the consumer (demand) and business (supply) sides of the industry. There are a few specific driving forces behind these shifts: evolving technology, a desire for personalization, and supply-side strategies.
Today’s consumers adapt to and use the latest technology with ease, and they expect the companies they do business with to update their services to match the pace of their changing lifestyles.
1. Mobile-first Shoppers
Smartphone sales and usage have increased rapidly in the past few years. According to an Invesp report, mobile devices account for 19% of all e-commerce sales in the US today. That number is expected to hit 27% by the end of 2018. o it’s no wonder that mobile shopping is expected to mirror this upward tick.
With consumers using smartphones to make purchases, read reviews, compare products, and more, it’s worth the investment to create a mobile-responsive, user-friendly website for your brand.
2. Storefront Apps
Another aspect of the mobile takeover of e-commerce is the demand for storefront apps. Today, mobile users spend 86% of their time within apps versus mobile sites. In other words, a branded native smartphone shopping app can help secure the customers in your target audience.
Consider this: a customer who’s given up space on their phone to download your app is likely already invested in your company or its products, whether looking to make a purchase or to find new information. In fact, storefront apps outperform mobile web conversion rates by up to 40%, supporting longer browsing sessions and driving repeat visits. e-commerce brands will want to strongly consider these powerful tools in the future.
3. Image and Voice Search
Innovation in online search is creeping around the corner. The latest trends from Google users points toward increased customer reliance on image and voice search.
Pictures (images) have always been worth a thousand words to a potential customer: the power of a strong image sells your product by showing details that can be hard to get across with words alone. And with digital assistants like Alexa and Siri tapped into an increasing number of devices worldwide, your customers are often not be typing queries about their favorite products anymore — they’re asking.
Together, image and voice searches will make up 50% of all searches by 2020. The eCommerce world will need to adapt to these search types to ensure their products can be found in this next realm of search.
4. Artificial Intelligence (AI)
Artificial Intelligence is no longer a futuristic fantasy. By 2020, 85% of customer interactions will be managed without a human.The face of customer service will undergo a major transformation in the years to come — and that’s only the beginning. Savvy eCommerce brands will invest in AI, drawing it into several new areas of the business, such as personalizing prices to match buyer behaviors, and collecting and reporting on consumer data.
5. Virtual Reality (VR) and Augmented Reality (AR)
Virtual and augmented reality systems have taken the gaming world by storm. This same technology will have concrete implications for the e-commerce industry in the years to come. In 2016, eBay, partnering with Australian department store Myer, launched the first virtual reality department store, allowing customers to see 2D and 3D retail products through their VR headset. Personalized and interactive technology is a huge draw for the millennial consumer and allowing potential buyers to get a closer feel for the size, shape, and quality of a product before purchase will change the way we buy products in the future.
Personalization, a desire for Niche Brands
Modern consumers, millennials, in particular, crave localized, vertical experiences over more uniform encounters with big brands — and they’re even willing to give away their data to a company that “gets” them. Increasingly health- and environmentally-conscious, customers want to support vertical brands instead of buying generic goods from big-box retailers, and the most successful e-commerce brands have taken notice.
6. Compelling Content
Bill Gates coined the phrase “content is king,” back in 1996 and in today’s digital world, there’s more competition than ever to offer highly compelling stories that portray a unified brand. With consistent brand details and storytelling, e-commerce businesses can help customers see and understand how the company’s products fit into their lives.
It’s worth noting a new trend among many brands today: managing the vast amount of required content by relying much more heavily on user-generated content. This type of content has been shown to build trust, increase conversion rates, and amplify the brand, and — perhaps best for the e-commerce business — it’s a virtually unlimited source of authentic stories.
7. Social Media Engagement
Closely linked with content creation is the need to engage with customers and potential customers where they live. Community building is critical in today’s market, and social media is the place to do it — on whichever platform your target audience is most active.
Customer expectations about social media are already high: use a company’s social media channel for customer service, and 72% expect a brand to respond within one hour. It is now essential for brands to build a space to deepen customer relationships and interact consistently with customers to nurture and transform them into avid fans and brand advocates.
8. Subscription Economy
Along with the shift from prioritizing products to prioritizing relationships, subscription services have seen a steady increase in recent years. According to Zuora’s Subscription Economy Index, revenues for subscription businesses grew 8 times faster than those in the S&P 500 from January 2012 to September 2017. Today’s users believe in subscribing to products versus owning them, and brands like Birchbox and Dollar Shave Club are successful examples of businesses that have played well with this trend.
In addition to all the trends outlined above, a few changes we’re seeing a draw from practical supply-side strategies. e-commerce brands are increasingly searching for ways to secure better margins, as well as better control of the consumer lifecycle.
9. Directly Sourced Materials
As with any business, the supply chain for e-commerce can sometimes be inefficient. The real challenge going forward is streamlining the process to cut out layers, create personal relationships with suppliers, speed up delivery times, and provide quicker feedback throughout the chain.
By sourcing materials directly, e-commerce businesses also open themselves up to savings: research from Kurt Salmon indicates that most retailers can see a 2% to 4% reduction in the cost of goods sold by sourcing materials more strategically.
10. Direct-to-Consumer Sales
As a result of heavy competition from the online giant, Amazon, the direct-to-consumer model of e-commerce has been steadily growing over the last few years. By 2020, direct-to-consumer sales are expected to reach $16 billion, up from $6.6 billion in 2015.
Some key advantages of this strategy are that it allows your brand to manage its own distribution, brand stories, and messages while collecting data from customers that can be used to track product purchases, market more effectively, and test and develop new products.
A Customer Focused Future
No one can predict the future, but these trends have been steadily taking shape over the past few years and will continue to play a huge role in the changing landscape of e-commerce for years to come.The main takeaway for any e-commerce business is that this isn’t the time to rest on your laurels: adapt, and continue striving for the best, customer-focused experience you can provide in 2018 and beyond.